Business is Tough, but Family is Worse: Household Bargaining and Investment in Microenterprises in Uganda

Abstract:
I present evidence that intra-household decision making affects business investment decisions and household welfare. I interact the results from a behavioral experiment that allows spouses to hide money from each other with an experiment that delivered capital to business owners in Uganda. Businesses were randomly selected to receive capital through a loan or grant, or capital paired with training. I find evidence that the grant with training treatment had medium-term economic impacts when given to men, but there are no effects from the other treatments for men or women. I also find that the loan with training treatment had impacts on the income of spouses of women, though women do not know about these effects. The results from the incentivized behavioral game correlate significantly with household economic outcomes: men who do not hide money from their wives show higher economic outcomes from the treatments, while those who hide money show a negative change relative to a control group. The opposite is the case for women: women who hide money from their husbands show increased economic outcomes, while those who do not hide money see a decrease in outcomes. The results are consistent with strong female household constraints where women have little control over resources in the family and so hiding money is the only way to keep control of it. Men have less fear of losing control of money in the household, and so those that hide money likely have serious household issues that lead to significant negative investment behavior. The results help to explain why women with existing enterprises have performed so poorly in previous capital experiments and why researchers have failed to find impacts from microfinance.